Understanding the Fair Debt Collection Practices Act

If a collection company calls you repeatedly, threatens litigation or tells you it can cause you to lose your driver’s license, or contacts you or your employer after you write and tell them to stop harassing you, the collection company is violating laws and rules applicable to the collection industry. Under the Fair Debt Collection Practices Act (FDCPA), businesses must follow certain rules when attempting to collect a debt. The federal law also imposes penalties for violations and provides protections for debtors.

What Types of Debts Are Covered?

The FDCPA covers personal, family, and household debts, including money you owe on a personal credit card account, an auto loan, a medical bill, and your mortgage. The federal law doesn’t cover any debts incurred in the operation of a business.

Who Is Considered a Debt Collector?

Under the FDCPA, a debt collector is someone who regularly collects debts owed to others. Collection agencies, attorneys who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them all fall under this definition and are subject to the law’s requirements.

Can You Prevent Debt Collectors from Contacting You?

Debt collectors can contact debtors by a variety of means, including phone, letter, email, or text message, when seeking to collect a debt; however, they must disclose that they are debt collectors and may not contact debtors at inconvenient times or places, such as before 8 in the morning or after 9 at night, unless the debtor agrees. They also may not contact debtors at work after being notified that the debtor is not allowed to receive such calls.

Within five days of first contacting a debtor, a collector must send a written “validation notice” detailing how much is owed, the name of the creditor to whom the money is owed, and how to dispute the debt. To prevent future contact from the collector, debtors must send written notification within 30 days. The letter may also request additional information to verify the debt and/or state that the debtor disputes that all or some of the money is owed. Once the collector receives the letter, they may only contact you to confirm there will be no further contact or to let you know that they or the creditor intend to pursue further action, such as filing a lawsuit.

Debt collectors may only contact third parties, such as employers, neighbors, or relatives, to obtain the debtor’s contact information, i.e. current address. They may only discuss the debt with you, your spouse, and any co-signor on the debt. If you are represented by an attorney with respect to the debt, the debt collector must contact the attorney, rather than you.

What Other Practices Are Prohibited?

The FDCPA generally prohibits debt collectors from using abusive, unfair, or deceptive practices to collect debts. Below are several examples of prohibited conduct:

• Harassment: Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, they may not use threats of violence or harm; publish a list of names of people who refuse to pay their debts (but they can give this information to the credit reporting companies); use obscene or profane language; or repeatedly use the phone to annoy someone.
• False Statements: Debt collectors may not make false or misleading statements when attempting to collect a debt. For example, they may not falsely claim that they are attorneys or government representatives; falsely claim that you have committed a crime; falsely represent that they operate or work for a credit reporting company; misrepresent the amount you owe; indicate that papers they send you are legal forms if they aren’t; or indicate that papers they send to you aren’t legal forms if they are.
• Threats: Debt collectors also are prohibited from saying that you will be arrested if you don’t pay your debt; they’ll seize, garnish, attach, or sell your property or wages unless they are permitted by law to take the action and intend to do so; or legal action will be taken against you, if doing so would be illegal or if they don’t intend to take the action.
• Unfair practices: Debt collectors may not engage in unfair practices when seeking to collect a debt. For example, they may not: try to collect any interest, fee, or other charge on top of the amount you owe unless the contract that created your debt – or your state law – allows the charge; deposit a post-dated check early; take or threaten to take your property unless it can be done legally; or contact you by postcard.

The Federal Trade Commission (FTC) is tasked with enforcing the FDCPA. Debtors may also pursue legal action. Debtors must sue a collector in a state or federal court within one year from the date the law was violated. If successful, the collector may be required to pay for any damages suffered because of the illegal collection practices, like lost wages and medical bills. In addition, the court may order the debt collector to pay statutory damages of up to $1,000, even if you can’t prove that you suffered actual damages.

If you are facing the threat of legal action in a connection with a debt, it is imperative to consult an attorney experienced in creditor collections who can help you resolve the matter. For businesses, it is also advisable to work with legal counsel to ensure that your debt collection practices do not result in costly FDCPA violations.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Robert Levy, or the Scarinci Hollenbeck attorney with whom you work at 201-806-3364.